PILOTed

Grant Funding for EdTech Startups

SBIR (Small Business Innovation Research) grants are a way for businesses with fewer than 500 employees to fund development and testing without giving up any equity.

Total amounts granted are generally in the $750,000 to $1,250,000 range, and the two most likely sources for SBIR financing for education technology are the NSF and the US Department of Education.  The Department of Education’s latest grant opportunity opens up November 21, 2016.

Most awardees go through a two-phase cycle. Phase I grants are for feasibility, and once a company has received and completed a Phase I grant, they can apply for a Phase II grant to develop and test the product.

A rule of thumb is that about 1 in 10 applications win a Phase I, and, of those who complete Phase I, about half have historically been awarded a Phase II grant. Having been a judge, it’s amazing how many of those applications are incomplete, unclear, or do not show knowledge of education or the education market. For those that are complete, clear, and show domain expertise, the odds are significantly higher.

The application is long, generally 15 to 20 pages; figure on 40 to 80 hours to fully complete the application. Both the NSF and the Department of Ed use independent evaluators to review and rate the applications. If you are considering applying, it is critical that you write with the reviewers in mind.

The reviewers generally look for

• Innovation: revolutionary, not incremental or evolutionary; high risk is a plus
• Broad Impact: addresses important issues with a high value proposition that will be compelling to its audience
• Commercialization Plan: a detailed and reasonable strategy for scaling with a justifiable market analysis showing defendable revenue and cost projections
• Strong team: technically and commercially experienced
• Efficacy: a plan to evaluate the product’s effect that is statistically significant
• Support letters from organizations and individuals who clearly indicate that they would invest in or purchase the product
• UX and UI: demonstration that the user experience and interface are clean, clear, and effective
• Resources: an understanding of the requirement to create a usable product along with milestones and deliverables
• IP: understanding of the competitive advantage and novelty of the product, and what intellectual property can be protected
• Complexity: demonstration that the project leaders understand the technical issues behind creating the innovation and the market issues in commercializing it

The application process is daunting so it is often helpful to work with someone (like Academic Business Advisors) that has been through the process a few times. We would be happy to talk to you.

CEO CFO Interview with Mitch Weisburgh

Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published October 31, 2016

CEOCFO: Mr. Weisburgh, would you tell us the vision when you started Academic Business Advisors back in 2005?

Mr. Weisburgh: In 2002 I was looking at education publishers and for the most part they were print based. It seemed to me that education was going to be moving much more towards technology. I thought that I could guide publishers on the differences between providing content as print and providing content electronically: instructional design in terms of content that could be more engaging than simple PDFs, sales and marketing of electronic products versus print ones, and strategy. I incorporated as Academic Business Advisors in 2005.

CEOCFO: Were you surprised how right you were?

Mr. Weisburgh: My biggest surprise is that it has taken so long. This past academic year is the first year education sales have been more than 50% technology versus print. That took over ten years and I thought it would be a three or four. And this is just the first wave; I think whenever you have a technology that is this transformational it takes three or four waves and iterations to get it right. Over the next five or six years we will refine how we provide and sell education technology until we figure out what engages the students and what gets them to learn well. That makes for an unprecedented opportunity for organizations with transformative products and services in the education sector.

CEOCFO: Would you give us a couple examples of how you work with your clients?

Mr. Weisburgh: Many clients have experience in one area. Perhaps they were teachers or print publishers or perhaps they were in some other business and feel that education is ripe for change. Our network of consultants has experience in all the different aspects of producing, selling, and marketing education products and services to schools. We meet with the management team and figure out their goals and then we relate their product and messaging to how schools make decisions, how they use content and how they pay for content.

To read more, click here.

Can Educators Trust a Company?

There is a certain distrust most educators have for-profit companies. I know many people who lead or work for those companies, and the vast majority of them subscribe to the same principle I do: “No one goes into education to get rich. We all go into education to make a difference, and we all also have to earn a living.”

Yet we can all cite examples of companies that have taken advantage of students, educators, and schools.

Dan Ariely points out that trust is easier to establish between individuals than between an individual and a company. But there are some tried and true methods that companies can use to build trust. In his article, The trust factory, he offers the following advice for these companies.

Recognize and reward  longstanding customers, especially programs that have no immediate benefit to the company. Establishing long term relationships increases trust.

Increase transparency by encouraging all feedback, publicly admit mistakes and the steps you are taking to correct them, and explain the thinking behind controversial or unpopular company policies. Stakeholders are more likely to be trusting when they feel the organization is forthcoming.

Explain intentions, like the rationale behind retiring certain product features, how certain actions come from sharing the same values as educators, or how certain policies or laws dictate how the company operates. Insights into company reasoning help build trust and also increase transparency.

Allow educators recourse, like online tools so educators can comment on and criticize products, offers of free products or services for dissatisfied educators, and the ability to talk to someone with a complaint. Knowing that one can make a company suffer when it doesn’t deliver makes us all more willing to take a risk. For more on this subject, watch the video.

Demonstrate common goals: encourage sales people to recommend options that help the educator but which may be less profitable, provide an easy way for educators to compare a product with a competitive one, and sometimes even recommend a competitor’s product.  A company might want to sponsor professional development, like Edchat Interactive, for educators as a way to demonstrate commitment to advancing learning. Sacrificing short term income for the benefit of the educator is an incredibly powerful act.

Ariely points out; businesses depend on the trust of their customers to survive. “The ability to create and nourish trust is open to all companies, and many should do more to minimize their image as a faceless giant working against helpless individual customers.”

What we can learn from the California ELA adoption

This article is jointly written by Bridget Foster and Mitch Weisburgh.

In addition to being the most populous state, California is often a bellwether for education change. This is the first year of California’s current ELA adoption. What can we learn, and how will this play out in the rest of the country?

What’s changed in this adoption cycle?

The last adoption for ELA instructional resources in California was in 2008, but was suspended the following year. This means that the last adoption with teeth and budget was in 2002, with many districts not purchasing materials over the last 12-14 years.

California, like other states, has been shifting control down to the districts. Of the five categories in the adoption, the primary category and the one getting all the attention, is for Basic ELA/ELD programs.  There were 6 approved programs for Basic ELA/ELD but making the list doesn’t guarantee any market share because of policy changes for the adoption itself that include:

• Districts are not required to purchase anything, and they can use the funds for other purposes as funds are now part of a block grant.
• Districts can choose a program off the list, or develop their own, if they can demonstrate it meets state criteria.
• This adoption list is good for 8 years, unless the schedule is modified, so purchases do not have to be in any one year.
• English Language Arts (ELA) and English Language Development (ELD, for English Language Learners) are now integrated into one program.

Two transformations are also changing the landscape of this adoption.

1. Common Core or 21st Century learning standards, are requiring changes to the curriculum, such as reading for greater understanding, increased emphasis on writing, and demonstration of critical thinking skills.
2. There is an increased use of technology, and an increasing number of schools and districts are moving to 1:1 environments.

In past adoptions, many districts followed the path of least resistance; continuing with the current product meant less disruption and less need for PD. But this time districts are more amenable to change due to increased technology capacity in some districts and the emphasis that the Common Core places not only on decoding text but also the ability to comprehend complex text.

This is an opportunity for any publisher, including those that have previously found it difficult to compete with the publishing giants, to pick up market share, with an innovative solution, and not just in California.

What’s happening?

Some larger districts seem to be more likely to develop their own learning resources, which is the path chosen by both San Francisco USD in Math (57,620 students)  and Stockton USD in various subjects (39,486 students) in our survey of curriculum purchasers. Larger districts are more likely to have the internal resources necessary to develop programs and to ensure that all student needs are met (i. e. handicapped students). If these materials prove to be less expensive but with comparable results, it could really change the competitive landscape.

Districts that have adopted 1:1 are strongly attracted to programs that emphasize 1:1. Houghton Mifflin Harcourt (HMH) revamped their materials to engage in more complex texts, eliciting the following comment from one school district, “HMH has increased the rigor in the curriculum. It’s upping the game and getting kids more prepared for college and career.” The HMH curriculum can be used as printed textbook, as a tech solution, or blended.

McGraw-Hill Education (MHE) chose a different tack with two offerings, one traditional and one designed for 1:1 solutions. This second solution hit pay dirt with schools and districts that have gone 1:1, and should be attractive as the number of 1:1 schools expands.

Benchmark Education created a K5 ELA curriculum based on Common Core. While their new approach makes some schools and districts uncomfortable, one county education official indicated that once people look at it they find it is the most rigorous, most rational, has the most scaffolding, and the text is tightly constructed for readability (same sentence patterns, language choices).

What could go wrong?

California schools are busy selecting and implementing new programs that integrate ELA/ELD for the first time, utilize technology more fully, and meet tougher learning standards. The rest of the country is watching to see how they fare:

• Many of the programs are relatively new offerings, there are no large scale long term studies showing they are any more or less effective than other solutions.
• Schools still have massive technology hurdles because of connectivity, alignment with Student Information Systems (SIS), and interoperability (single sign on, rostering, and gradebooks). While there are a lot of purported solutions, schools are finding that they need custom integrations in many cases.
• A good amount of professional development is needed to transition to Common Core (or whatever name a state chooses to use for the tougher 21st Century standards) and the use of technology-based solutions.
• In this budget year, districts have not budgeted for the integration and PD services they might need. While these services are available from the publishers, they are not free. This is causing friction. In the future both districts and publishers will need to be better prepared to smooth the implementation.

With schools demanding more rigorous materials that comply with 21st century learning standards, and with technology deployment issues dogging efforts to go fully digital, it's a confusing time. Publishers can contact us for advice and direction.

 

Education: Follow the Money

Twenty years ago, we all accepted that the US had the best education system in the world. But that changed about ten years ago, when we started paying attention to international reports on student outcomes.
But at least we knew that we outspent everyone. Others may be (temporarily) ahead of us, but by putting our money where our priorities were, we could hold our heads high. And maybe these reports were measuring the wrong things. Isn’t it generally true that you get what you pay for?

Well it turns out, the OECD points out that we aren’t spending that much. In K12, the US now ranks 12^th (out of 46 OECD countries) in terms of spending per student. While the US spends about $140,000 per student over their 13 years of K-12, Luxembourg spends about $250,000. The US is 7^th on spending on education as a percentage of GDP.

And it’s not much prettier in Higher Education. As Inside Higher Ed points out:

"During the last 25 years, states have been paying an ever-shrinking portion of the costs of educating students at public colleges. That trend will be hard to reverse, as spending on Medicaid and other competing needs is likely to increase in most states."

And states pay almost three times as much for Higher Ed as the Federal government does. “Over time, the burden of the cost is being shifted from the state over to the students,” said Steve Mims, the filmmaker behind “Starving the Beast,” a documentary on the defunding of public universities.

If you’re reading this, you care about education. What are you going to do about it?

Highlights from the BMO Back To School Conference 2016

What to expect in policy over the next 12 months

Both candidates have been strong supports of charter schools, and both have shown broad support for reducing the burden of student loans. Trump is strongly anti-union. Clinton is likely to make a huge investment in preschool. Clinton is likely to follow Obama’s policies. Trump is more likely to fund school choice, letting the money follow the student even if the student moves out of the public education system.

Regulation has been subject to wide swings based on the discretion of federal and state policy makers, and the full effects of policies are often delayed for two to three years after a regulation is adopted. As a result, many administrators take a wait and see posture (we’ll be here years after you’ll be gone), since so many policies fizzle before they can be fully implemented.

Maybe focusing on student loans doesn't solve the underlying problem. Isn't the real question how do we make sure that students don't go to institutions where they are worse off after they finish than they were before they started?

Where are the EdTech Opportunities?

Schools are becoming more sophisticated, especially since a typical school system deploys over 30 different systems. They are not just looking at one-off solutions, they are more often looking at how any solution affects the total picture: does it make it easier for teachers, does it drive student learning, how does it affect other systems they have, does it provide needed easily accessible information to teachers and administrators, does it help the school with compliance and compliance reporting?

Still, a lot of money is wasted in EdTech. While other sectors can make claims that technology drives efficiency, in education there may never have been an instance where a school or district actually laid off people based on a technology solution. Imagine telling a parent that her son’s school is moving to 1:1 and that now there will be 60 in a classroom instead of 30. 

Education moves a lot slower than other sectors; remember, it took 30 years for the overhead projector to move from the bowling alley to the classroom. One of the biggest problems is making teachers comfortable with teaching with technology, and that’s difficult to do when schools only have 1 tech support person for every 60-100 teachers. PD is an opportunity, with $2.3B in federal Title II funds.

If you’re a potential investor in education, this is not a sector you can just dabble in. It’s a tricky business and it’s very hard to scale. You’re more likely to get a return on a $30M business looking to grow to $100M than on a $3M one hoping to grow to $30M. And the failure rate of education startups is too high to make money on.

The best opportunities may be outside the US. There is a massively growing K12 population around the world, and everyone wants an IB or US style education for their kids, and an increasingly large number are able and willing to pay for it.

What does Arne Duncan think about education now?

Education should be a bipartisan priority, yet neither candidate is talking about the big issues of education. Don’t blame the candidates, it’s a reflection that no votes on education, it’s our fault.

The ultimate issue is making education lead to real jobs. How are we going to keep good jobs in the US when employers can go wherever the qualified workers are?

For-profit schools have been much more nimble than the public sector. They saw an unmet need, they have been able to scale. They are able to react to the market. But if for-profit schools do not police their own bad actors, the government is going to do it, and they are not going to like the results.

Early childhood education shows a 7:1 ROI. There is no excuse for society not to make that investment.

Since Common Core came out, 40 states have opted for tighter learning standards. That’s a good result.

Account Management: Often Acknowledged, Seldom Practiced

If you’re like most EdTech businesses, you need to be the best, and you need to close business. Which means you’re probably primarily focused on product, and secondarily on sales. Right?

We’ve written before on Why aren’t more Edtech products reaching more students, Lead generation, and The Fallacy of If You Build it, They will Come.

But no matter how great your product, or how well you are at selling new customers, if you don’t retain and grow existing customers, you won’t stay in business for very long. Especially in education; where there is a limited universe of potential customers . There are fewer than 4,500 districts with more than 2,500 students, and about the same number of Higher Ed institutions; how many of these can you afford to lose?

Renewals? Upgrades? Lifetime value of a customer? Maybe it’s time to shift priorities.

Effective management of the lifetime value of a customer needs to permeate every phase of your operation: product, sales, implementation, support, and marketing.

Here are a few things to keep in mind:

• Product: How does your product make teachers, students, and administrators keep coming back? What else can you offer them to help them solve problems?
• Sales: To what extent are you communicating long term gains through long term use?
• Implementaton: How well are installation and training aligned to the reasons the school chose to use you?
• Support: How do you help schools find out what else they can use you for?
• Marketing: what conversations are you having with prospective and existing schools that help them work better and smarter?

Do you want to talk about account management, renewals, and upselling in greater depth? We’re running a session at Ednet on Sept 27 or just contact us.

Are you compliant with privacy and security requirements regarding student data?

How would you even know?

Here is a primer, whether you are a teacher, administrator, or service provider.

The goal is to protect student information, student records and student-generated content from unauthorized access, destruction, use, modification or disclosure based on the sensitivity of the data and the risk from unauthorized access. The implementation is a moving target, as the technologies and methodologies often refer to meeting or exceeding

• industry standards,
• the HIPPA Security Rule as amended from time to time, and
• the current guidance and recommendation from Health IT Policy Committee.

Student security applies to any entity that knows that their service is designed, marketed, and used for school purposes. If a student or school is using a product that does not meet these criteria, the privacy laws may not be applicable for that company or that product.

Student information, student records, or student-generated content cannot be used for any purposes that have not been spelled out in a contract, and specifically cannot be used for targeted advertising, and the information cannot be sold, rented, shared, or traded. While a company can advertise, the advertisement cannot be based on any information acquired or access through school purposes.

Student identifiable information cannot be stored for longer than is required based on the educational purposes, and all student generated content is owned by the student and parents.

A supplier can use student identifiable information in order to improve their service.

A suppler can de-identify student information, and use it to improve their product and to demonstrate effectiveness, and it may share de-identified student information to improve their services.

Generally, in case of a breach, the supplier is required to notify the local or regional board of education (and sometimes students and parents) within a specified amount of time, sometimes within 30 days.

Generally, any use of school data or systems must be under contract, and all contracts should include at least the following provisions:

• A statement that student information, student records and student-generated content are not the property of or under the control of a contractor;
• A description of the means by which the local/ regional board of education may request the deletion of student information, records or generated content in the possession of the contractor;
• A statement that the contractor shall not use student information, records and generated content for any purposes other than those authorized pursuant to the contract;
• A description of the procedures by which a student, parent or legal guardian of a student may review personally identifiable information contained in student information, records or generated content and correct erroneous information, if any, in such student record;
• A statement that the contractor shall take actions designed to ensure the security and confidentiality of student information, records and generated content;
• A description of the procedures that a contractor will follow to notify the local/ regional board of education, in accordance with the provisions of section 4 of this act, when there has been an unauthorized release, disclosure or acquisition of student information, records or generated content;
• A statement that student information, records or generated content shall not be retained or available to the contractor upon completion of the contracted services unless a student, parent or legal guardian of a student chooses to establish or maintain an electronic account with the contractor for the purpose of storing student-generated content;
• A statement that the contractor and the local/regional board of education shall ensure compliance with the FERPA of 1974, 20 USC 1232g, as amended from time to time;
• A statement that the laws of the state of Connecticut shall govern the rights and duties of the contractor and the local/regional board of education and
• A statement that if any provision of the contract or the application of the contract is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions/applications of the contract which can be given effect without the invalid provision or application.

If the contract is missing one or more provision, the entire contract might be void.

What should be your take-away?

If you are going to use an applicable product or service, or if you are intending to provide a product or service into schools, you need documentation that

• There are security measures that meet industry standards for use of student data.
• There are security breach notification procedures.
• Uses of any data is limited to approved purposes, especially regarding advertising and marketing strategies.
• Agreements exist with any and all third parties cover the security and privacy requirements of the state.

I want to note that some of the descriptions and language come from the Connecticut Act surrounding student data and privacy.

Real Cool for School

On August 24 (my birthday, by the way)  First Lady Michelle Obama announced ThinkZone Games as the grand prize winner in the Reach Higher Career App Challenge! ThinkZone Games will receive $100,000 and additional sponsor prizes valued at $300,000 for our career exploration mobile app Hats & Ladders.

If you're going to be at the EdNet Conference Sept 25-27, and want to talk about the place of games in our education system, or about Edchat Interactive, or about the education market, contact us.

 

Macys to close 100 stores… What’s that got to do with education?

Macys just recently announced that they are closing 100 of their 700 stores.

Some background:

• Consumer spending is not down, just spending at traditional retail stores
• More people are buying online, where Amazon accounts for 2/3 of all Internet retail sales
• Yes, Amazon sells twice as much as all the other 2 million online retailers combined
• Nothing lasts forever; Macys had a good run, and now it’s got to figure out how to reinvent itself
• The good news from Macys is that they beat analysts’ estimates; sales declined less than they have in previous years. That doesn’t sound too good to me
• When today’s consumers are not purchasing based on price, they look for an experience; brick and mortar stores may need to become more than resellers, they may need to consider how to become destinations

So how does this relate to education?

This is the world our graduates will be entering. Rapid change. Reinventing yourself. Boom and bust. We probably can’t develop those skills in our students if we are teaching to the test. Speaking selfishly, if we want to prepare the next generation so that they can support our retirement, something has to change.

This is the world we are operating in. We’ve seen gut wrenching changes in industry after industry, in market sector after sector. Established institutions brought to their knees. Layoffs. Success for the disrupters. What makes us think we can continue to do the same things we’ve always done in education? One way or another, we’re likely to see the demise of industrial age education. Maybe we all need to update our skills and become change agents.

For those of us who create and distribute content or software to education, our buyers are the same people who are now looking for experiences, otherwise they just buy online based on price. A select few organizations will be large enough to thrive by selling the latest cheapest technology. For the rest of us, we’ve got to make the experience of using our products and services so effective, so easy, and so enjoyable, that schools and teachers keep coming back.